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The USD/JPY receives bids to consolidate recent losses around the mid-133.00s as markets prepare for the release of the US Q1 GDP on Thursday morning. The cautious optimism surrounding the US debt ceiling extension and the Bank of Japan (BoJ) Officials' defense of the current ultra-easy monetary policy could bolster the corrective rebound.

In response to the passage of the "Limit, Save, and Grow Act," a spokesperson for the White House stated that President Joe Biden has made it plain that this measure has no chance of becoming law. The same threatens the bill's initial optimism in the face of apprehensions of a lengthy and contentious debate on the key issue. Reuters reported on Wednesday that the US House of Representatives narrowly passed a measure to raise the country's $31.4 trillion debt ceiling, defying President Joe Biden by appending sweeping expenditure cuts for the following decade.

Former BoJ Deputy Governor Masazumi Wakatabe recently stated that he will be astonished if the BoJ modifies Yield Curve Control (YCC) on Friday. Previously, Bank of Japan (BoJ) Governor Kazuo Ueda stated in the Japanese Diet that the danger of a rise in inflation due to a loss of market confidence in Japan's finances is currently modest. The official also attempted to tamp down inflation concerns and implies indirectly that there will be no change at this week's monetary policy meeting, not even regarding the YCC.

In addition, the USD/JPY is impacted by contradictory US data and equity market performance, as US Durable Goods Orders rose while Consumer Confidence decreased. In addition, the tech titans enabled the Nasdaq to maintain its strength, but First Republic Bank (FRB)'s escalating concerns, as evidenced by a 20% share price decline on Wednesday following a 50% decline the day before, weigh on sentiment.

In this context, US Treasury bond yields are trendless, while S&P 500 Futures are up 0.20 percent around 4,083 as of press time, following Wall Street's muddled close.

In the future, USD/JPY traders should focus on the risk catalysts, namely the banks and the US debt ceiling, while awaiting the US first quarter (Q1) Gross Domestic Product (GDP), which is anticipated to decline to 2.0% on an annualized basis from 2.8% previously.

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